Premier Foods secures re-financing package

Food manufacturer Premier Foods said sales for ongoing business fell 3.4%, reflecting the tough consumer environment, as it agrees a new re-financing package.

The firm, behind brands such as Hovis, Sharwood's and Mr. Kipling, said total sales stood at £1.811bn compared to £1.874bn the previous year. Adjusted profit before tax slumped to £58m from £100.5m, down 42.3%. Trading profit for ongoing business fell 29.3% to £173.7m.

Goodwill and intangible asset impairment in Bread division of £282m resulted in a loss after tax from continuing operations of £230m for the year. Sales of Meat-free, Canned grocery and Brookes Avana realised total net proceeds of £394m.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Premier Foods also announced that it has obtained a £1.4bn re-financing package until June 2016.

"The re-financing package provides the foundation on which the group's growth strategies can be implemented. During the coming year, the group's priorities remain to stabilise its operational performance, while enabling the business to increase its focus through selected disposals," it said in a company statement.

Banking covenants have been re-set to support the strategic plan and pension schemes are to defer deficit contributions until January 2014.

Chief Executive officer Michael Clarke added, "We intend to draw a line under the performance of 2011. Having put the financing and strategic building blocks in place, our immediate priorities are to implement this re-financing package, continue stabilising the business, re-focus the portfolio and invest in our future growth."

"Whilst we recognise that the consumer environment remains challenging, our performance thus far in 2012 is in line with our expectations. I'm convinced we have the right team to turn this business around and I am very positive about our future."

Net debt stood at £995.1m at 31 December 2011.

CJ